Since its inception, the IMF has maintained a system of representation and voting based on the size of their economy and proportional to their contribution. This method has, by and large, remained a relic of the post-War scenario. Consequently, the Bretton Woods institution currently witnesses a situation whereby 61% of the voting rights is held by 14 countries, and the rest by 172 nations. While the US holds 17% of the rights, making it the only country that can block any decision, European economies hold around 40% of the share. Countries like Belgium and Netherland, currently hold weighted vote powers equivalent to China, and higher than India.
However, at the recently concluded G20 summit in Pittsburgh, developing economies, led by China and India were aiming at a reform of the voting system, making way for those nations that are leading the world out of the recession. Admittedly, this was also supported by the Obama administration in the US, calling for a shift in the voting representation. Invariably, the European nation-states will lose out on this bargain; while we’re not clear as to which nation(s) will bear the brunt, a reduction anywhere between 5 and 7% is expected. Apparently, a draft communique to this effect has been signed by the G20.
From Reuters (who have a copy of the Communique):
It called for a shift in IMF voting by at least 5 percent, although several G20 representatives said it was a 5 percentage point shift from developed to under-represented countries. Currently, the split in voting power is 57 percent for industrialized countries and 43 percent for developing countries. The shift would make the split nearly 50-50.
While this would perhaps not match up to the extent demanded by the BRIC, it is very clear that consensus is rapidly developing on the need to recognize powerful, emerging economies, especially in the aftermath of the financial crisis.
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